Industry NewsMortgage

Subprime lending explodes

Mortgage brokers learn about pros, cons of subprime market

SALT LAKE CITY—Wayne Thompson has been considering tapping into the subprime lending market for about two years. The idea is in his business plan for Lexington, Ky.-based Residential Mortgage Services, but other changes have taken priority. Still, it made sense that Thompson attended a session at the 2004 National Association of Mortgage Brokers convention here on subprime lending. He didn't learn a lot of about the nuts and bolts of setting up that type of business, but he came away with a newfound appreciation for the increase in subprime lending over the last few years. "It just blew my mind," he said. Subprime mortgage originations totaled $322.9 billion in 2003, an almost eight-fold increase over the $41 billion originated in 1996. Moreover, subprime originations grew in all the years in between, even in 1999 and 2000 when interest rates rose, making that market a potentially lucrative one as interest rates continue their climb now. Stuart Feldstein, president...